1997 (5) TMI 233 - AT - Central Excise

Summary

Issues Involved:
1. Classification of engine treatment and manual gear box and differential treatment oils.
2. Classification of engine coolant.
3. Eligibility for benefit under Notification No. 120/84-C.E., dated 11-5-1984.
4. Eligibility for benefit under Small Scale Industries (SSI) Notification No. 175/86-C.E., dated 28-2-1986 and 1/93-C.E., dated 1-3-1993.
5. Imposition of redemption fine and penalty.
6. Invocation of the extended period for demand of duty.

Detailed Analysis:

1. Classification of Engine Treatment and Manual Gear Box and Differential Treatment Oils:

The Commissioner of Central Excise classified the products under sub-heading No. 3811.00 of the Central Excise Tariff as prepared additives for mineral oils. The appellant contended that their products should be classified under sub-heading No. 2710.60 as lubricating oils, which are defined as oils ordinarily used for lubrication excluding any hydrocarbon oil with a flash point below 94^0C. The appellant argued that their products, which include PTFE blended lubricating oil, should not be classified as additives but as lubricating oils. However, the Tribunal found that the products are added to lubricating oil and gear oil, indicating they are used as additives rather than as primary lubricants. The Tribunal upheld the classification under sub-heading 3811.00, noting that the products are described as additives on their packaging and in their usage instructions.

2. Classification of Engine Coolant:

The Commissioner classified the engine coolant under sub-heading 3820.00 of the Central Excise Tariff as anti-freezing preparations. The appellant admitted liability for this classification during the personal hearing. The Tribunal noted that the engine coolant was not declared in the appellant's filings and agreed with the Commissioner's classification. The extended period for demand was invoked for the engine coolant as it was not disclosed in the appellant's declarations.

3. Eligibility for Benefit under Notification No. 120/84-C.E., dated 11-5-1984:

The appellant claimed the benefit of Notification No. 120/84-C.E., which provides exemption from duty to blended or compounded lubricating oils and greases. The Tribunal found that the products classified under sub-heading 3811.00 as prepared additives for mineral oils are not covered by this notification. Therefore, the appellant was not eligible for the exemption under this notification.

4. Eligibility for Benefit under Small Scale Industries (SSI) Notification No. 175/86-C.E., dated 28-2-1986 and 1/93-C.E., dated 1-3-1993:

The Commissioner denied the benefit of SSI notifications on the ground that the Australian Company was not eligible for exemption. The appellant argued that the brand name "Nulon" is registered in their name in India, entitling them to the benefit. The Tribunal referred to the Calcutta High Court judgment in the case of Collector of Central Excise v. ESBI Transmission Pvt. Ltd., which held that the assessee is eligible for SSI exemption if the brand name is registered in India, even if it belongs to a foreign company. The Tribunal remanded the matter to the jurisdictional Commissioner to examine the eligibility for SSI exemption in light of this judgment.

5. Imposition of Redemption Fine and Penalty:

The Commissioner imposed a redemption fine of Rs. 1,94,700 and a penalty of Rs. 2 lakhs under Rule 173Q of the Central Excise Rules, 1944. The Tribunal noted that the appellant had been filing declarations for their products and that the extended period for demand was not invoked for engine, gear box, and differential treatment oils. Only the engine coolant had the extended period invoked. Considering these factors, the Tribunal reduced the penalty to Rs. 50,000.

6. Invocation of the Extended Period for Demand of Duty:

The extended period was invoked for the engine coolant as it was not declared by the appellant. The Tribunal found no infirmity in this decision, as the coolant was not covered under the declared products of PTFE blended lubricating oil and grease.

Conclusion:

The Tribunal upheld the classification of engine treatment and manual gear box and differential treatment oils under sub-heading 3811.00 and the engine coolant under sub-heading 3820.00. The appellant was not eligible for the benefit under Notification No. 120/84-C.E. The matter of SSI exemption was remanded for further examination. The penalty was reduced to Rs. 50,000, and the extended period for demand was confirmed for the engine coolant. The appeal was disposed of in these terms.